Urban Edge Properties (UE) Q1 2025 Earnings Call April 30, 2025 08:30 AM ET Speaker0 Greetings, and welcome to the Urban Edge Properties First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Olson. Please go ahead. Speaker1 Good morning, and welcome to Urban Edge Properties First Quarter twe ...

Financial Data and Key Metrics Changes - The company reported FFO as adjusted of $0.35 per share, a 6% increase over the first quarter of last year, marking the highest quarterly earnings result in the company's ten-year history [5] - Same property NOI increased by 3.8% compared to the first quarter of last year, benefiting from improved recovery ratios and better-than-expected collections [5][17] - The company reiterated its 2025 full-year guidance of achieving FFO as adjusted of $1.37 to $1.42 per share, reflecting growth of 4% at the midpoint [8][19] Business Line Data and Key Metrics Changes - The company executed 42 leases totaling 434,000 square feet in the first quarter, including 18 new leases amounting to 118,000 square feet with same-space cash leasing spreads of 34% [5][13] - The tenant retention ratio remained high at 95%, and SHOP occupancy grew to a record 92.4%, a 150 basis point increase since the last quarter [6][14] Market Data and Key Metrics Changes - The investment sales market is showing early signs of slowing down, with limited CMBS issuance since April [7] - The company successfully sold eight acres of land for $25 million and is under contract to sell two more properties for $41 million, bringing total dispositions to $66 million this year at a 5% weighted average cap rate [8] Company Strategy and Development Direction - The company plans to reinvest capital from dispositions into accretive acquisitions to enhance portfolio quality and growth rate [8] - The company has a large redevelopment pipeline totaling $156 million of projects expected to generate a 14% return [10][15] - The company is focused on capital recycling, having acquired over $550 million in assets at a 7.2% cap rate while selling approximately $450 million at a 5.2% cap rate [11] Management's Comments on Operating Environment and Future Outlook - Management expressed a more conservative outlook for the back half of the year due to economic volatility, despite a stronger start to the year than expected [9][19] - The company remains confident in its ability to navigate economic cycles and drive sector-leading growth [21] Other Important Information - The company has approximately $800 million of total liquidity, including $98 million in cash, and a manageable debt maturity profile with only 8% of outstanding debt maturing through 2026 [18] - The company has built in conservative assumptions for the remainder of the year, incorporating contingencies for potential volatility in rent collections and tenant fallout [20] Q&A Session Summary Question: How does macro uncertainty affect leasing timelines? - Management noted that there has been no observed slowdown in retailer demand, with ongoing negotiations for numerous leases [25][26] Question: Can you provide more details on the dispositions and cap rates? - Management indicated that the recent dispositions were at attractive cap rates, and they are actively seeking acquisitions [27][28] Question: What specific factors led to a more cautious outlook? - Management stated that the decision to maintain conservative guidance was prudent, without specific tenant concerns driving the change [34][35] Question: How does the company view its portfolio in a recessionary environment? - Management expressed confidence in the portfolio's resilience, highlighting strong tenant balance sheets and a focus on well-capitalized anchors [50][52] Question: What are the bad debt assumptions for the year? - Management reiterated guidance for bad debt to be 75 to 100 basis points of gross rents, with a slight contingency built in for the second half of the year [59]

Financial Performance - For the three months ended March 31, 2025, net income was $8.4 million, a significant increase from $2.4 million in the same period of 2024, representing a growth of 245%[142] - Total revenue increased by $8.5 million to $118.2 million in Q1 2025 from $109.6 million in Q1 2024, reflecting a growth of approximately 7.8%[142] - Funds From Operations (FFO) applicable to diluted common shareholders rose to $45.5 million in Q1 2025, compared to $39.1 million in Q1 2024, marking an increase of 16.5%[141] - Net Operating Income (NOI) for the same period was $71.6 million, up from $66.7 million in Q1 2024, indicating a growth of 7.0%[141] - Same-property NOI increased by $2.1 million, or 3.6%, for the three months ended March 31, 2025, compared to the same period in 2024[149] Cash Flow and Liquidity - Cash and cash equivalents, including restricted cash, increased to $98.1 million at March 31, 2025, from $90.6 million at December 31, 2024[160] - Net cash provided by operating activities was $32.6 million for the three months ended March 31, 2025, an increase of $9.7 million from $22.9 million in the same period in 2024[162] - The company believes current cash flows, cash on hand, and access to capital markets will be sufficient to finance operations and obligations[170] Expenses and Costs - Property operating expenses increased by $2.2 million to $22.7 million in Q1 2025, compared to $20.5 million in Q1 2024, an increase of approximately 10.7%[142] - Interest and debt expense decreased by $0.8 million to $19.8 million in Q1 2025 from $20.6 million in Q1 2024, a reduction of about 3.9%[144] - Total capital expenditures for the three months ended March 31, 2025, were $20.7 million, compared to $20.2 million in the same period in 2024[164] Debt and Financing - As of March 31, 2025, the outstanding balance on the line of credit was $75 million, which was repaid by $25 million subsequent to the quarter[140] - As of March 31, 2025, the estimated fair value of consolidated debt was $1.6 billion[175] - Variable rate debt outstanding was $125.6 million with a weighted average interest rate of 5.38%[173] - A 1% increase in the weighted average interest rate of fixed rate debt would increase annualized interest expense by approximately $15.3 million[173] - The company has exposure to fluctuations in interest rates, particularly for variable rate debt indexed to SOFR[172] Dividends and Shareholder Returns - The company declared a quarterly dividend of $0.19 per common share for the first quarter of 2025, equating to an annual rate of $0.76[154] - The company did not issue any common shares under the ATM Program during the three months ended March 31, 2025[157] Development Projects - The company had 23 active development, redevelopment, or anchor repositioning projects with total estimated costs of $156.4 million as of March 31, 2025[163] Risk Management - The company continues to monitor inflation impacts, with interest rates remaining elevated compared to pre-2021 levels[140] - As of March 31, 2025, the company had no material exposure to foreign currency exchange risk or commodity price risk[176] - The company is a counterparty to two interest rate derivative agreements designated as cash flow hedges as of March 31, 2025[174]

Financial Performance - Funds from Operations (FFO) as Adjusted increased by 6.0% to $45.9 million, with FFO per diluted share at $0.35, compared to $0.33 in the same quarter last year[9]. - Net income for the three months ended March 31, 2025, was $8,382,000, compared to $2,445,000 for the same period in 2024, representing a significant increase[34]. - FFO applicable to diluted common shareholders for the three months ended March 31, 2025, was $45,458,000, compared to $39,050,000 in 2024, reflecting an increase of about 16.3%[34]. - The company’s FFO per diluted common share for the three months ended March 31, 2025, was $0.35, compared to $0.32 for the same period in 2024, marking an increase of 9.4%[34]. - Total revenue for the three months ended March 31, 2025, was $118,165,000, with general and administrative expenses amounting to $9,531,000[46]. - Total revenue for the three months ended March 31, 2025, was $118,165, an increase of 7.0% from $109,626 in 2024[48]. - Net income attributable to common shareholders for Q1 2025 was $8,198, compared to $2,603 in Q1 2024, representing a significant increase of 215.5%[48]. - Adjusted EBITDAre for the same period was $66,414,000, up from $60,803,000 in 2024, reflecting an increase of 9%[38]. Property and Leasing Activity - Same-property Net Operating Income (NOI) grew by 3.8%, driven by rent commencements and higher net recovery revenue[10]. - The Company executed 42 new leases totaling 434,000 square feet, with new leases generating an average cash spread of 34.3%[11]. - The company reported a same-property NOI including properties in redevelopment of $66,162,000 for the three months ended March 31, 2025, compared to $63,725,000 in 2024, showing a growth of approximately 6.4%[36]. - The company has signed leases not yet commenced that are expected to generate an additional $25.1 million in future annual gross rent, representing approximately 9% of current annualized NOI[12]. - The company executed 18 new leases in Q1 2025, covering 118,457 square feet, with a new rent per square foot of $45.49[57]. - The weighted average lease term for same space leases in Q1 2025 was 4.7 years, indicating stability in lease agreements[57]. - As of March 31, 2025, the top twenty-five tenants represent 49.9% of total square feet and 47.0% of annualized base rent (ABR), with total ABR amounting to $153.9 million[56]. Occupancy and Market Metrics - Consolidated portfolio leased occupancy was reported at 96.4%, a slight increase of 30 basis points year-over-year, but a decrease of 40 basis points from the previous quarter[11]. - The company reported a same-property physical occupancy rate of 94.1% for Q1 2025, up from 93.6% in Q1 2024[49]. - The retail portfolio's lease expiration schedule indicates a strategic opportunity for Urban Edge Properties to renegotiate leases and potentially increase rental income[63]. - The company owns 74 properties with a total gross leasable area of 17.3 million square feet[41]. - The total market capitalization is approximately $4.17 billion, with a net debt to total market capitalization ratio of 37%[20]. Debt and Liquidity - Total liquidity stands at approximately $791 million, including $98 million in cash and $693 million available under a revolving credit agreement[20]. - The total mortgage debt balance is reported at $1,580,602,000[67]. - The company has $75 million outstanding on its unsecured $800 million line of credit, with a maturity date of February 9, 2027[73]. - The weighted average interest rate on total debt remains at 5.05% as of March 31, 2025[72]. - The net debt to total market capitalization ratio stood at 37.3%, reflecting the company's leverage position[46]. Future Outlook and Guidance - The Company updated its 2025 full-year guidance for net income per diluted share to a range of $0.40 to $0.45, while maintaining FFO guidance of $1.36 to $1.41 per diluted share[21]. - The company anticipates same-property NOI growth, including redevelopment, to be between $0.06 and $0.07 per diluted share for 2025[24]. - The company is focusing on expanding its retail footprint, with properties like Tonnelle Commons and Ledgewood Commons showing high occupancy rates of 100% and 99.3% respectively[66]. - Future outlook includes maintaining high occupancy rates and exploring new leasing opportunities to further enhance revenue streams[66]. Development and Redevelopment Projects - Active redevelopment projects total $156.4 million, with an expected yield of approximately 14%[16]. - The estimated unleveraged yield for total active projects is 14%, based on total estimated project costs and incremental NOI[69]. - The company is redeveloping multiple properties, including Bruckner Commons and Hudson Mall, with significant tenant additions planned[69]. - Completed projects have incurred costs totaling $49,800,000, with stabilization achieved in Q1 2025 for several properties[70].

Company Overview - Urban Edge Properties (UE) is headquartered in New York and has experienced a price change of -14.98% this year [3] - The company currently pays a dividend of $0.19 per share, resulting in a dividend yield of 4.16%, which is lower than the REIT and Equity Trust - Retail industry's yield of 4.64% but higher than the S&P 500's yield of 1.69% [3] Dividend Performance - The current annualized dividend of Urban Edge Properties is $0.76, reflecting an 11.8% increase from the previous year [4] - Over the last 5 years, the company has increased its dividend 3 times year-over-year, with an average annual increase of 11.83% [4] - The current payout ratio is 51%, indicating that the company paid out 51% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for Urban Edge Properties' earnings in 2025 is $1.40 per share, with an expected increase of 3.70% from the previous year [5] Investment Considerations - Urban Edge Properties is considered a compelling investment opportunity due to its strong dividend play and current Zacks Rank of 3 (Hold) [7]

Company Overview - Urban Edge Properties (UE) shares increased by 7.8% to close at $17.57, following a notable trading volume, contrasting with a 14.6% loss over the past four weeks [1] - The anticipated quarterly funds from operations (FFO) for Urban Edge Properties is projected at $0.35 per share, reflecting a year-over-year increase of 6.1% [2] - Expected revenues for the upcoming report are $113.88 million, which is a 3.9% increase compared to the same quarter last year [2] Market Sentiment - The recent rally in UE's stock price is linked to increased investor optimism, partly due to President Trump's announcement of a 90-day pause on reciprocal tariffs for most countries [1] - The consensus FFO per share estimate for Urban Edge Properties has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without revisions in FFO estimates [4] Industry Context - Urban Edge Properties operates within the Zacks REIT and Equity Trust - Retail industry, where another company, Saul Centers (BFS), saw a 4.1% increase in its stock price, closing at $33.52, despite a -12.6% return over the past month [4] - Saul Centers has a consensus FFO per share estimate of $0.73, which represents an 8.8% decrease from the previous year [5]

Company Overview - Urban Edge Properties (UE) is a real estate investment trust based in New York, focusing on owning and managing shopping centers [3] - The company has experienced a share price decline of 14.19% this year [3] Dividend Information - Urban Edge Properties currently pays a dividend of $0.19 per share, resulting in a dividend yield of 4.12%, which is slightly below the industry yield of 4.17% and significantly above the S&P 500 yield of 1.61% [3] - The annualized dividend of $0.76 represents an 11.8% increase from the previous year [4] - Over the past five years, the company has increased its dividend three times, averaging an annual increase of 5.97% [4] - The current payout ratio is 51%, indicating that the company pays out 51% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year, Urban Edge Properties anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 at $1.40 per share, reflecting a 3.70% increase from the previous year [5] Investment Appeal - Urban Edge Properties is considered a compelling investment opportunity due to its attractive dividend and strong Zacks Rank of 2 (Buy) [7]

Core Insights - Urban Edge (NYSE: UE) has been highlighted for its quality properties located in densely populated regions and its effective asset recycling strategy, which has contributed to decent returns for investors since the last coverage in January 2024 [2]. Group 1: Company Overview - Urban Edge focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging opportunities [1]. - The company has a beneficial long position in its shares, indicating confidence in its future performance [3]. Group 2: Investment Strategy - The investment approach emphasizes defensive stocks with a medium- to long-term horizon, aligning with the current market conditions [2].

Core Viewpoint - Urano Energy Corp. has completed an initial review of historical uranium reserve and resource estimates for its Bachelor, Dulaney, and La Sal Creek projects in Colorado, which are part of a larger acquisition of uranium assets [1][3]. Summary by Relevant Sections Company Developments - The company has identified nearly 477 thousand pounds of historical uranium reserves ("U3O8") across the three properties, contributing to a total of approximately 714 thousand pounds of historical uranium reserves in its inventory [3][5]. - Urano Energy expects its historical uranium mineral reserve inventory to increase significantly in the coming months as further analysis of its database continues [3][14]. Property Details - The Bachelor, Dulaney, and La Sal Creek properties are located in the Uravan Mineral Belt and La Sal Creek District, covering a total of 20 lode mining claims across 425 acres (1.72 square kilometers) [4][5]. - The properties have a history of production and contain historical estimates of uranium-vanadium reserves and resources [1][5]. Historical Estimates - The historical estimated uranium and vanadium reserves and resources for the three properties include: - Bachelor: 104,528 lbs. of U3O8 and 132,457 lbs. of V2O5 - Dulaney: 193,412 lbs. of U3O8 and 15,102 lbs. of V2O5 - La Sal Creek: 179,170 lbs. of U3O8 and 60,288 lbs. of V2O5 [7][8]. - The total historical estimates for the three properties amount to 477,110 lbs. of U3O8 and 207,847 lbs. of V2O5 [7]. Future Potential - The company has identified additional drill targets with high potential for new discoveries, which could further enhance its uranium inventory [3][15]. - Urano Energy plans to prioritize the completion of NI 43-101 Technical Reports for its properties to convert historical estimates into current mineral resources [13][14]. Industry Context - The Uravan Mineral Belt has a rich history of uranium and vanadium production, with over 80 million pounds of uranium and 400 million pounds of vanadium produced since 1945 [16][17]. - The region remains a key area for uranium exploration, driven by increasing global demand for uranium [17].

Financial Data and Key Metrics Changes - FFO as adjusted increased by 8% for the year to $1.35 per share, achieving three-year earnings target one year ahead of plan [7] - Same-property portfolio occupancy grew to 96.6%, with a signed but not open pipeline expected to generate $25 million of future annual gross rent, representing 9% of NOI [8][12] - FFO as adjusted for Q4 was reported at $0.34 per share, contributing to the full year figure of $1.35 per share [26] Business Line Data and Key Metrics Changes - In 2024, the company executed a record 79 new leases totaling 485,000 square feet, with a same-space cash rent spread of 26% [7][17] - The overall leasing volume for 2024 was strong, with new leases and renewals achieving spreads of 26% and 9% respectively [18] - The company completed $30 million of redevelopment projects expected to generate a 16% unlevered return [10] Market Data and Key Metrics Changes - Foot traffic increased by 3% over the previous year at grocery-anchored centers, with retail occupancy in the Northeast at a 10-year high of 95% [20] - New shopping center construction is at a near-record low, only 0.2% of total supply [20] - The company noted that tenant bankruptcies present more opportunities than risks, with identified replacement tenants at spreads up to 90% [21] Company Strategy and Development Direction - The company aims for FFO as adjusted growth of 4% or better in 2025, with same-property NOI growth of at least 3.5% [13] - The company is focused on capital recycling, acquiring higher-growth assets while disposing of lower-growth ones [42] - The company plans to continue enhancing portfolio quality through disciplined capital allocation and operational excellence [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth plans for the next decade, emphasizing the importance of improving shopping centers in urban communities [12] - The company anticipates gradual growth in NOI and FFO throughout 2025 as new rents commence [30] - Management highlighted the strong balance sheet with over $800 million in total liquidity and a favorable debt maturity profile [27] Other Important Information - The company announced a 12% increase in its dividend to an annualized rate of $0.76 per share [34] - The company has a strong in-place pipeline of $163 million at a 15% return, nearly all tied to executed leases [22] Q&A Session Summary Question: Visibility on same-store NOI and bad debt - Management provided details on the bad debt provision, indicating 70 basis points related to bankrupt tenants and 40 basis points as a general reserve [38] Question: Commentary on acquisition pipeline - Management noted an increase in available products but highlighted challenges in making deals pencil due to competitive cap rates [40][42] Question: Demand for specific assets and cap rates - Management indicated that cap rates for single-tenant assets are expected to be in the 5% range, while larger stable power centers may be around 6% [48] Question: Status of redevelopment projects - Management expressed excitement about progress at Sunrise Mall and the potential for various uses beyond retail [52][66] Question: G&A cost management - Management discussed efforts to streamline processes and reduce costs through headcount allocation and third-party spending [61][63]